WACC for Fake Private Company
Doing a case competition over break where I am running a DCF on a make-believe restaurant company. There is pretty minimal financial data, but enough for a DCF (They don't even give Net Income, so I am using industry average Tax Rate).How would you go about finding the different components for WACC? For example, should I find similar companies and use an average of their beta? There is a lot of great PE information on EV/EBITDA and Sales/EBITDA multiples for restaurant companies.My model is solid so far (imo), but definitely need to narrow down the WACC components, g, and the EV/EBITDA multiple.Never looked at a private "company" before so any direction is greatly appreciated.
Don’t have full info on your exercise, but here some pointers. First, if you are using WACC you are valuing the firm. So should use FCFF. You can assume 25% tax rate or something like that. Second, for WACC you can get industry beta and adjust it for the capital structure you are assuming. If they don’t give you capital structure, then don’t know how if you are supposed to assume one. But if I were you I’d just use a range of 8-10% for WACC. That’s what people do at work most of the time.
Thanks a lot. That is a huge help
Qui eum rem possimus quia molestiae. Rerum accusamus consequatur omnis est nihil rerum. Explicabo ipsum labore labore cupiditate.
Quas qui ad et qui. At quis veniam recusandae. Repellat omnis dolor ea beatae. Voluptate magni omnis commodi veniam iste culpa.
Error cumque quo sint. Quidem esse officiis ex inventore sunt pariatur impedit. Sint sed ab ut laudantium in. Quaerat nisi molestiae debitis ut vero ut. Omnis eius dolorem asperiores sed est in voluptates.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...